Downtown valuations soar since TIRZ's 2001 creation

Published 7:00 pm, Sunday, April 25, 2010

In March 2001, the Midland City Council created Tax Increment Reinvestment Zone No. 1 or "Downtown Midland TIRZ."

The expectations were that a reinvestment zone could increase downtown valuations, which had fallen below $100 million.

Things have changed.

Eight years later, the 2009 TIRZ annual report, submitted to the City Council earlier this month, reported that assessed value of real property within the zone had surpassed $170 million, a $71 million increase since its creation.

Mark Wellen, who's served on the TIRZ board since its inception and currently is its chairman, attributes the rise in valuations to the general economy and shortage of office space, which drove valuations up. The report shows valuations increasing by more than $62 million since 2005.

"We will be watching for a year or two and see what valuations do," Wellen said. "We are optimistic they won't get down to the lows we saw years ago."

Mayor Wes Perry said if you consider inflation, today's valuations inside the TIRZ still fall short of downtown's "heyday."

"It is not uncharted territory, just back to a normal place," Perry said.

The TIRZ, according to the Midland TIRZ website, works by capturing the tax value generated in the zone above the base year value and reinvesting that revenue back into public improvements within the zone. The zone was created for a 30-year duration or until dissolved by the city.

The Downtown TIRZ has benefited from the participation of the city of Midland and three other taxing entities — Midland County, Midland College and the hospital district. Those three combine for a little more than 50 percent of TIRZ revenue.

Reinvestment inside the TIRZ thus far, according to the 2009 annual report, is highlighted by an $800,000 commitment to the renovation of Centennial Plaza ($400,000 up front and $400,000 to be paid out over 10 years at a fixed income rate).

The TIRZ board also has approved a pair of payments to the Midland Community Development Corp. In September 2006, the board committed $45,000 in reimbursements for building 12 single-family homes. Payments of $8,800 and $8,356 were made in 2006 and 2008 respectively. No payments were made in 2007 or 2009 because all the terms of the agreement were not met.

In 2008, the TIRZ board approved a $25,000 payment to MCDC as reimbursement for expenditures associated with the Old Pueblo Park townhouse development. The first payment of $20,175 was made in 2009.

"I think we have a lot of upside to go," Perry said.

Officials acknowledge there may be some who believe the increase in valuations makes this the right time for the TIRZ to be dissolved. The city alone saw $327,440 in revenue go to the TIRZ last year. Since 2001 that amount is more than $1.03 million. Officials say it is that upside, which makes any talk of dissolving the TIRZ right now a little premature.

Even with as much as $1 million of revenue in the bank, the TIRZ is still in its infancy stage, Wellen noted.

Perry added, "If you can get investments done today, you will be better off in the long haul."

Wellen said possible uses of the revenue include "environmental abatements" — helping to make buildings "more adept at being remodeled or renewed."

Wellen said those approaching the board include officials with the Lofts at Main residential living project, located at Main Street and Illinois Avenue. He called the talks ongoing. Wellen stressed there are limitations in what TIRZ money can be used for and projects don't earn TIRZ reimbursement revenue until they show an increase in valuations.

"My attitude is we can get serious about looking for ideas which might spur development downtown," Wellen said. "This is the same money you'd hope the city would spend at (downtown) projects anyway. … I hope we can strengthen downtown and go beyond where (valuations) used to be."